Why Is Crypto Rising and Will It Crash Again? Market Analysis
February’s Consumer Price Index (CPI) inflation data came in lower than expected, driving a bullish sentiment in the crypto market. Analysts had predicted the annual CPI rate to decline from 3.0% in January to 2.9% in February, with core CPI dropping from 3.3% to 3.2%. However, the actual CPI rate fell further to 2.8%, reinforcing the expectation that the Federal Reserve may cut interest rates. A rate cut would weaken the US dollar and boost crypto investments by increasing liquidity in financial markets. Investors anticipate an 85-basis-point rate cut from the Fed this year, making risk assets like Bitcoin and altcoins more attractive. Additionally, the US Producer Price Index (PPI) data, released on March 12 at 12:30 p.m. GMT, has added to the market’s upward momentum as traders bet on looser monetary policies. Bitcoin’s Recovery and Growing Investor Confidence Bitcoin rebounded strongly after a sharp drop on March 11, surging 1.10% intraday to trade at $82,767.64. The price is forming higher lows within a rising wedge pattern, which suggests an 8% breakout potential. Crypto analyst Ali Martinez predicts that if Bitcoin surpasses $84,000, it could rally toward $89,000–$90,000. Markets responded positively to the February CPI report, which showed a 0.2% month-over-month inflation increase, below the expected 0.3%. With inflation cooling, investor sentiment has improved, fueling Bitcoin’s bullish momentum. Traders are watching key resistance levels closely, as breaking above $84,000 could drive further gains. Fear and Greed Index Signals Market Recovery The Fear and Greed Index climbed from Extreme Fear (24) to Fear (34), reflecting a shift in investor sentiment. Historically, extreme fear has created buying opportunities, and traders have taken advantage of the improved market outlook. As confidence returns, Bitcoin and the broader crypto market continue to rise. Will Crypto Crash Again? Factors to Watch Despite the bullish trend, potential risks could trigger volatility in the market. Economic Uncertainty and Trump’s Trade Policies The US recently retracted its plan to double tariffs on Canadian steel and aluminium but still imposed a 25% tariff. Trade tensions could impact the broader economy, affecting risk assets like cryptocurrencies. Investors remain cautious as geopolitical and economic factors evolve. Regulatory Concerns Over XRP ETF Delay Regulatory uncertainty lingers as the US Securities and Exchange Commission (SEC) delays its decision on XRP, Dogecoin, Litecoin, and Solana ETFs. Franklin Templeton’s application for an XRP ETF has increased optimism, but approval likely won’t come until 2025. Analysts estimate a 65% chance of approval next year, but ongoing delays create uncertainty about the crypto market’s stability. Final Thoughts The crypto market is experiencing short-term gains fueled by the lower-than-expected CPI report, Bitcoin’s rebound, and rising investor confidence. However, economic policies, regulatory decisions, and global trade uncertainties remain key factors that could impact market stability. While the current trend looks bullish, traders should stay vigilant as the market navigates potential challenges.
